Guest article

Don’t make a food manufacturing drama out of a crisis

Richard Barker is a food and drink insurance specialist with Sutton Winson.

Related tags:
Product recalls, Sutton Winson

There were 393 product recalls last year, 82 (20%) of which were food and drug related, according to the website www.recalluk.com
. But this figure is not a true representation as a large proportion of recalls occur before product distribution.

Recall reasons are varied, which highlights the complexities of the supply chain. However, the most common appears to be accidental contamination.

The list also included: cottage pie with choking hazards, packaging containing the wrong product (a mix-up with gammon and haddock springs to mind), and drink bottles failing due to product fermentation.

I make no apologies for detailing these examples. They illustrate what happens when a partner within your supply chain fails. And, whether in or out of your control, the financial and reputational consequences for your business can be severe. They can also jeopardise your stakeholder relationships.

In today’s fast-moving social media environment, a product recall and the negative feedback associated with it can go ‘viral’ within minutes, reaching thousands, if not millions of people around the world. Leading ‘brands’ use social media platforms such as Facebook to boost their marketing and so can expect the same platforms to be conduits for bad news.

How you control the situation determines your future reputation. So it’s vital to have a public relations as well as disaster recovery strategy in place. In independent surveys, companies cite ‘loss of reputation’ as the greatest perceived risk facing their business.

Two-thirds of business leaders believe it’s harder to recover from reputational failure than it is to build and maintain a reputation. They say it takes, on average, three to four years for a company to recover from reputational damage. Some never recover. But if a ‘crisis’ is handled well, it may enhance your reputation.

Britvic spent £25M on a recall

In July, Britvic spent £25M on a recall of Fruit Shoot products and then, a month later, had to recall its Ballygowan water due to its odour. Commentators suggested the negative publicity associated with this recall would damage Britvic's brand.

To reduce the likelihood of a recall, review your company’s supply chain partners, assess their health and safety, risk management and business continuity plans and scrutinise their insurance cover. That will help to ensure you’re not left paying costs others may be liable for.

Similarly, audit your health and safety, risk management and business continuity plans. Also, satisfy yourself that the insurance you have in place is adequate for your liabilities – for example, product recall, contamination, lost business and public relation costs.

Insurance providers are here to ‘watch your back’ and protect your people, property, assets and reputation. They should audit your company and supply chain processes, identify and minimise the risks, review supply chain partnership relationships, create business continuity plans and ensure your insurance will cover costs following an unexpected crisis.

Those experienced in this sector will spot potential issues, help you manage a crisis and rebuild your brand, improving your chances of regaining your reputation and costs.

There were 393 product recalls last year, 82 (20%) of which were food and drug related, according to the website www.recalluk.com
. But this figure is not a true representation as a large proportion of recalls occur before product distribution.